Ag shippers worry about capacity, equipment

Friday, June 22, 2012

Agricultural shippers say their biggest concern heading into the second half of 2012 is getting access to equipment in inland areas and capacity shortages.
A panel of shippers at the annual Agriculture Transportation Coalition meeting in San Francisco Thursday described the issues facing their businesses in a session intended to broach subjects outside of rates.
“We all agree what happened last year wasn’t sustainable,” said Jeff Seiwert, vice president of operations at poultry exporter Interra International. “That will leave our carrier friends with no other option but to pull capacity like in ’09. That keeps me up at night. We’re all going to suffer at the end. I tell folks that they should want these (general rate increases) to stick.”
Siewert said he’s also concerned about a potential work stoppage at U.S. East Coast ports if unionized dockworkers and their employers don’t agree on a new contract before the current one expires at the end of September.
“If you’re an importer of goods from Asia, your contingency plan for a work stoppage is easy,” he said. "(As an East Coast-based exporter) I can’t afford to rail a lot of my stuff to Asia that normally goes via Charleston. And that’s only Asia. What about Europe, and the Caribbean and Africa?”
In his presentation, Siewert also described how varying weight restrictions for containerized goods among different states can impact how cargo is routed. He said Interra is focused intently on maximizing container utilization, but that certain states have lower weight allowances than neighboring states.
“Despite attractive rates from ports in Jacksonville and elsewhere in Florida, we won’t cross state lines from Georgia and Alabama because weight restrictions (in Florida) don’t allow us to maximize loads," Siewert said.
Another shipper, Emily Deng of Minnesota-based cheese and dairy product export Davisco, said her biggest concern is equipment availability.
“While we understand it’s costly for carriers, it’s also costly for ag shippers in the Midwest,” she said. “We’re all hoping we’ll be the one to get a container that day. And we need quality, food-grade equipment, too.”
Richard Lidinsky, chairman of the U.S. Federal Maritime Commission, said in a speech that “it’s unacceptable for any shipping line in this country to deny shippers boxes where they need them and when they need them.”
Meanwhile, an executive for liner carrier Hamburg Sud explained the cost pressures carriers face.
Jurgen Pump, senior vice president of Hamburg Sud North America, said a single sailing, using a chartered vessel, costs around $4.1 million, with $2.7 million of that tied to fuel. Another $1.1 million comes from charter hire costs (though they might be much lower if the charter was negotiated on recent depressed rates). - Eric Johnson